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More On Timeshare Mogul Threatening To Shut Down His Business If Obama Is Re-Elected

Timeshare mogul David Siegel, who was briefly a billionaire in 2007, has come out swinging against President Obama. In a letter to his employees this week, signed “your boss,” Siegel outlined all the reasons why employees shouldn’t vote for Obama; included was a threat that he might retire to the Caribbean and get out of business altogether if Obama is re-elected.

Siegel sent me a copy of the letter (which first appeared in Gawker and was mentioned in my colleague Frederick Allen’s post) along with these additional comments:

I actually got the idea for (the letter to employees) from a letter that’s been circulating for years with a similar story, I used it as a guide. I wanted my employees to be informed as to what could happen if the current President is reelected. It’s not speculation, I have hindsight. I lived the last 4 years under the Obama administration and my company was cut in half. In 2008 I had 12,000 employees today we have 7,000, in 2008 I did $1billion in sales and today we are doing less than that. The good news is today we are the most profitable in our history. We went from fat, dumb and happy to lean and mean and all this happened without Obamacare and higher taxes, which will be a disaster for the next 4 years. I’m still having fun running my company, but if I’m forced to downsize even further I’ll think seriously about retiring and that could be unfortunate for my 7,000 employees. You can multiply my experience by millions of other small businesses and its not hard to predict what the future will hold if Obama is reelected. On the other hand, if Romney is elected businessmen like me would get a shot of adrenalin and will start hiring and growing the businesses and within a short period of time my company and this country will once again be prospering, at least I hope so.

Siegel is using his own personal rags-to-riches story as a reason to support Romney. He depicts himself as an entrepreneur who has worked tirelessly to build his fortune, has invested every penny back into the business and is now being forced to bail out those who made poor decisions.

Even to this day, every dime I earn goes back into this company. Over the past four years I have had to stop building my dream house, cut back on all of my expenses, and take my kids out of private schools simply to keep this company strong and to keep you employed.

It’s a bit hard to reconcile all this with the fact that Siegel is also the man who tried to build his wife a modern day castle so opulent that it might have ended up as the biggest private home in America. It never did get completed and indeed, these days Siegel is likely best remembered for his starring role in the award-winning documentary, The Queen of Versailles, about him and his wife Jacqueline, a former Miss Florida three decades his junior, who hit rough times during the economic crisis and subsequent credit crunch. The couple eventually had to suspend building on their 90,000 sq. foot compound dubbed Versailles, which was expected to have, among many other features, 6 pools, 10 kitchens and 30 bathrooms.

I met Siegel and visited the construction site of the massive house back in 2007, a year before the financial crisis hit. I had flown to Florida after his team had tried unsuccessfully to lobby for a spot on the Forbes 400, insisting his personal fortune was $1.8 billion. In my subsequent profile of him, I pegged it at $1 billion; it is now much lower.

Back then, I was struck by his company’s use of leverage. As of 2006, it had $816 million worth of notes payable and lines of credit, more than its sales, and Siegel himself had lent the company more than $100 million out of his pocket. “It takes a lot of money to keep the business running,” Siegel told me, “You have to keep borrowing to keep growing.” The same could be said for his lower-to-middle class customers – he referred to them as the “Johnny Lunch-Bucket crowd,” who “shop at Wal-Mart” and otherwise would stay in a “Ramada Inn” – who were borrowing to buy up timeshares in places like Orlando, Williamsburg, Va, and Gatlinburg, Tennessee. When banks started tightening their lending practices in the wake of the financial crisis, the buyers ran into financial problems and his business came to a halt. He had to lay off 7,000 of his 12,000 employees.

I checked in with Siegel on the eve of last summer’s release of the Versailles documentary. At the time he insisted everything was going great, that the movie had blown everything out of proportion for entertainment value and that he expected to restart construction on his giant house soon. He even predicted he would one day be on the Forbes 400. Plus he made a point of telling me he’d been hiring and now had 6,000 employees, up from 5,000. In his letter to employees yesterday, he claimed to be up to 7,000. So he’s actually hired 2,000 in recent years, even with President Obama in office.

Will he make good on his threat? We’ll check back in with him after the election. For more on Siegel and his outsized personality, read the original 2007 Forbes story.

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Love the context you provide here, Luisa: “Plus he made a point of telling me he’d been hiring and now had 6,000 employees, up from 5,000. In his letter to employees yesterday, he claimed to be up to 7000. So he’s actually hired 2,000 in recent years, even with President Obama in office.”

Thanks Kashmir. I did feel like his letter to employees made more sense, or perhaps didn’t make any sense, if readers had a bit more perspective on this guy. He is prone to making over-the-top statements…

As a small businessman, I CERTAINLY know where this guy is coming from! Let’s not judge the message by the messenger who delivered it. I feel quite the same way … but would probably not express those feelings in a letter … especially I’m in a different line of business (technology) where employment continuity is next to Godliness! His employees are probably more “generic”, part-time but eligible for medical benefits that are valued at a significant percentage of their cost of employment, and as such are more at risk.

One of the problems that everyday people don’t understand or appreciate is the degree of risk that an entrepreneur or business owner takes. Without a commensurate reward, people won’t take the risk and won’t create new jobs! I know that I haven’t stuck out my neck to open new product lines (requiring new employees) for the last four years! When you take his and my actions and multiply it by the number of small / medium sized businesses in the USA, you’ve cost the economy millions of jobs!

Well put psumba80, the only problem I have is that most of these guys it seems can’t balance how much profit they take out. The question I guess is what is a “commensurate reward”? It seems a lot of companies taking out a lot more than they should instead of saving cash for the company itself. But it’s their company to do with as they please.

Right. Because the thing that voters REALLY need is to be threatened with being fired if they vote the wrong way. After all, these business owners are the ones who know everything; why shouldn’t they use strong-arm and fear tactics to ensure that they get their way? This is an even less honest tactic than buying access to politicians through large campaign contributions.

I think it’s impossible to evaluate how the economy will do under a Romney administration mostly because he’s been very vague on HOW he will get anything done; for instance, with the increasing partisanship in Washington, how does he plan to get enough Democrats on board to accomplish anything? Further, if he’s managed to grow his business and be more profitable than ever, while under the current administration, then why is he so desperate for Romney to take office? After all, the downturn happened because of events prior to this President, and his great success has happened after.

I agree. It is not appropriate for him to send out that kind of letter, and to talk about having to pull his kids out of private school so he can keep his employees’ jobs..something i didn’t put in story is that he blamed democrats for the entire housing meltdown because democrats wanted people to have home ownership. well, he wanted those same kind of people – “the johnny lunch bucket crowd” – to use similarly loose financing to get money to buy his timeshares.

Sorry James, but I disagree. Obama, if you remember, campaigned entirely on Change and Hope 4 years ago. No direct plans, etc. I know, because I looked on his website the night he was elected since I wanted to know what his ‘plan’ was. Website was closed down, as well as EVERY link to his ‘plan’…

I agree with Mike – please re-watch the 2008 debates. Obama had NO plans whatsoever. He has destroyed this country with debt and regulation. You would have to be very illiterate, have no understanding of economics and be brainwashed by the liberal media to give Obama another 4 years.

There would be very little difference in an Obama second term, & a Romney admin. Romney wants to spend on military, Obama on his unions & such. But most of what they want, is identical. Romney who previously differed from Obama in immigration issues, has now said he will honor Obamas’ recent amnesty for illegals, so Romney yet again is identical to Obama.

Romney starts out different sometimes, but ends up constantly exactly the same as Obama.

I mean, I get it, politics are an emotional roller coaster, & this guy was taking his employees down the Titan, whether they want to go or not because he is blinded by his own emotion. Sad to see.

But in the scheme of things, about par for almost everyone in America unfortunately. We regretfully are what we read. We swell with “news cycles” of propaganda. Stay in our rigid box of “everything right” or “everything left”, till we find ourselves puking on the people behind us.

Mitt Romney is not at all conservative. Which means that America would be far worse off with Romney. Because he embraces everything that Obama has done wrong, & everything that everyone has done wrong all along as “the fix all”. Mitt Romney is the right embracing failure as a way of life.

Me, I’m going on the Ferris wheel. Mitt Romney, no thanks. I’ll stick with what we’ve got before I bend over for the right again.

I have never understood Obama. It’s as though he’s from another country. As a small biz owner, it is frustrating to have a ‘leader’ who just makes no sense to me when looking back over my 31 years of business ownership. I understand this guys frustration, my business is not capital intensive, but it is in worse condition today than during my first 36 months in biz back in the early 80′s. A prez I can figure out instead of scratching my head would be a big relief………

What is it that troubles you? I’m not for anyone. I just want to hear “real” people’s point of view. What business are you in that you’re business is hurting today. I can say for sure 40-70% of business would be hurting unless you’ve taking full advantage of the web. As 9/10 I can go and find someone cheaper or get it done for free cause of some YouTube video.